Snapshot of recent development

Tax legislation and policy announcements

Information release: Digital services tax

On 1 March 2024, Inland Revenue released CAB-23-SUB-00361 which includes several reports and cabinet documents relating to a digital services tax (and the related Bill introduced in September 2023). The Bill is currently awaiting its first reading.

Business Payment Practices Act repealed

On 7 March 2024, the Business Payment Practices Act Repeal Act 2024 received Royal Assent. The Act repeals the Business Payment Practices Act 2023 and revokes its secondary legislation.

Treasury: New paper on effects of taxes, benefits on household incomes

On 19 March 2024, the Treasury released AN24/01 Fiscal incidence in New Zealand: The effects of taxes and benefits on household incomes in tax year 2018/19.

Good and Services (Removing GST from Food) Amendment Bill

On 20 March 2024, Rawiri Waititi’s (Te Pāti Māori) Member’s Bill Goods and Services Tax (Removing GST from Food) Amendment Bill was defeated at its first reading.

Income Tax (Clean Transport FBT Exclusion) Amendment Bill

On 20 March 2024, Hon Julie Anne Genter’s (Green Party) Member’s Bill Income Tax (Clean Transport FBT Exclusion) Amendment Bill was drawn from the Parliamentary Ballot. The Bill seeks to remove Fringe Benefit Tax for five years from zero-emissions vehicles provided to staff as part of their salary package. The Bill is yet to have its first reading.

FamilyBoost announcement

On 25 March 2024, the Government announced that it intends to introduce a FamilyBoost payment from 1 July 2024 as part of Budget 2024. The payment will equal 25% of ECE fees, to a maximum of $75 per week. All families earning up to $180,000 with childcare costs are eligible and the payment will gradually reduce for families earning more than $140,000.

Budget Policy Statement 2024

On 27 March 2024, the Budget Policy Statement was released. The Statement sets out the Government’s goals for its term of office, priorities for Budget 2024, and fiscal strategy. 

Inland Revenue statements and guidance

NSC: national standard costs for specified livestock determination 2024

On 5 March 2024, the National Standard Costs for Specified Livestock Determination 2024 was published.

Technical Standards Work Programme: items scheduled for public release

On 5 March 2024, Inland Revenue released an information table that provides an update on the status of current items on the Technical Standards Work Programme.

Draft interpretation statement: partnerships – general guidance

On 13 March 2024, Inland Revenue released PUB00467, a draft interpretation statement on the income tax treatment of partnerships (including limited partnerships). The rules for general and limited partnerships are largely the same, and the draft also includes a discussion of the deduction limitation rule (which only applies to limited partnerships).

The deadline for comment is 24 April 2024.

Droughts declared – Marlborough, Tasman, Nelson, Canterbury, Otago

On 14 March 2024, the Minister for Agriculture announced a medium-scale adverse event for the Marlborough, Tasman and Nelson districts, and on 21 March 2024 a medium-scale adverse event for the Canterbury and Otago regions, because of the current drought conditions.

To help affected farmers and growers Inland Revenue have made a ‘class of case’ decision for the Income Equalisation Scheme. Information about discretionary relief can be found here.

Draft Standard Practice Statement: requests to change a balance date

On 21 March 2024, Inland Revenue released ED0252, an exposure draft proposing changes to SPS 18/02 which sets out the Commissioner’s practice for considering and approving requests to change a balance date for income tax purposes.

Proposed changes include allowing Māori taxpayers and businesses to adopt a 30 June balance date to align with Maramataka Māori and discussion of the Commissioner’s ability to approve a change of balance date under the Financial Reporting Act 2013 and transitional reporting periods for any financial reporting obligations subject to that Act.

The deadline for comment is 3 May 2024.

Technical decision summary (Adjudication): receipt of a one-off payment

On 25 March 2024, Inland Revenue published the adjudication decision TDS 24/04 receipt of a one-off payment.

The decision relates to a real estate agent who entered a contract with an agency that included a one-off payment payable to the agency on signing. This amount was required to be repaid if the contract was terminated by either party within two years.

The agency deducted withholding tax on the amount. The agent filed their return showing the withholding deduction but did not include the payment as income. The agent argued that the payment was a loan and only taxable after the expiry of the potential termination event.

The Tax Counsel Office determined the payment was not a loan and was derived on receipt.

Technical decision summary (Adjudication): Sale of bare land when intended for subdivision

On  28 March 204, IR released TDS 24/05 sale of bare land when intended for subdivision.

The decision relates to three taxpayers who held units in an unincorporated joint venture (the JV). The JV acquired an undivided beneficial ownership interest in various assets, including land and the activities of the JV included subdividing and selling a number of residential sections from the land. In the year of assessment, the taxpayers sold their units (including the underlying interests to the remaining undivided land). The taxpayers returned the proceeds from the sale as assessable income but subsequently issued notices of proposed adjustment to remove this amount under the contention that, in relation to section CB 6 of the Income Tax Act 2007, while the intention was to sell subdivided land, the parties never intended to sell bare land. The taxpayers also contended that given tranches of the land had previously been subdivided and sold, and proceeds returned under section CB 12, section CB 6 could not apply to the remaining land. Finally, the Taxpayers argued that the sale was a sale of the units, an identifiable capital asset, therefore land provisions could not apply.  

The Tax Counsel Office determined that the amount derived on the sale of the units was income under section CB 6, as the land was acquired with a purpose or intention of sale. There was no legislative or case law basis that section CB 6 could not be used to tax the remaining land if the sale of the other land was taxed under section CB 12. There was no need to consider if the units were an identifiable capital asset, as the land was disposed of so CB 6 applied. 

Tax Information Bulletins, Vol 36, No 2 and No 3

Inland Revenue has released the Tax Information Bulletins for March 2024 (Vol 36, No 2) and April 2024 (Vol 36, No 3). 

Global tax news

Australia: treasury introduces global and domestic minimum tax legislation

On 21 March 2024, the Australian Treasury released the exposure draft primary legislation (which includes three bills) as part of the implementation of Pillar Two. An explanatory memorandum and discussion paper have also been prepared to assist stakeholders in providing feedback. The deadline for feedback is 16 April 2024.

The Australian Treasury has also released exposure draft subordinate legislation and accompanying explanatory materials. The deadline for feedback on the subordinate legislation is 16 May 2024.

Further details can be found in this tax@hand article from Deloitte Australia.

Australia: changes to thin capitalisation rules finally pass both houses of
Parliament

On 27 March 2024, the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023 was passed.

Provisions generally apply to years commencing on or after 1 July 2023. The debt creation rules apply for years commencing on or after 1 July 2024.

Further details can be found in this tax@hand article from Deloitte Australia.

United Kingdom: Carbon Border Adjustment Mechanism (CBAM)

The UK Government has announced its intention to implement the CBAM (following the European Union) from 1 January 2027. The UK CBAM aims to address “carbon leakage” and will apply to specific carbon-intensive goods.

A second consultation is currently open and will close on 13 June 2024.

More information can be found here from Deloitte UK. 

Australia: NSW duty and land tax surcharges set to resume for certain foreign investors

On 8 April 2024, the Treasury Laws Amendment (Foreign Investment) Act 2024 received royal assent. 

In broad terms, the act seeks to overcome the non-discrimination articles in Australia's tax treaties with Finland, Germany, India, Japan, New Zealand, Norway, South Africa and Switzerland, to confirm that the state and territory stamp duty and land tax foreign surcharges, and federal foreign investment fees, are lawfully imposed on foreign investors. 

The act takes effect on and from 9 April 2024, with retroactive effect from 1 January 2018. 

More information can be found in this tax@hand article from Deloitte Australia.

OECD updates

Design of presumptive tax regimes working paper released

On 19 March 2024, the OECD released Working Paper No. 69 The design of presumptive tax regimes in selected countries.

Release of the latest OECD/G20 Inclusive Framework peer review report

On 20 March 2023, the Inclusive Framework on BEPS released its latest peer review report.

The report confirms that most agreements concluded between Inclusive Framework members are either already compliant with the Action 6 minimum standard or will shortly come into compliance.

OECD presents international tax update to G20 Finance Ministers and Central Bank Governors

The OECD Secretary-General has prepared a tax report to present to Finance Ministers and Central Bank Governors at the 2024 G20 Rio de Janeiro finance meeting.

Note: the items covered here include only those items not covered in other articles in this issue of Tax Alert.